Andrea Jones v. Southpeak Interactive Corp
Filing
PUBLISHED AUTHORED OPINION filed. Originating case number: 3:12-cv-00443-REP-DJN. [999516853]. [13-2399, 14-1765]
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PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 13-2399
ANDREA GAIL JONES,
Plaintiff - Appellee,
v.
SOUTHPEAK INTERACTIVE CORPORATION
PHILLIPS; MELANIE J. MROZ,
OF
DELAWARE;
TERRY
M.
Defendants – Appellants.
--------------------------THOMAS E. PEREZ, Secretary of the United States Department
of Labor,
Amicus Supporting Appellee.
No. 14-1765
ANDREA GAIL JONES,
Plaintiff - Appellee,
v.
SOUTHPEAK INTERACTIVE CORPORATION
PHILLIPS; MELANIE J. MROZ,
OF
Defendants - Appellants.
DELAWARE;
TERRY
M.
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Appeals from the United States District Court for the Eastern
District of Virginia, at Richmond.
Robert E. Payne, Senior
District Judge. (3:12-cv-00443-REP-DJN)
Argued:
December 10, 2014
Decided:
January 26, 2015
Before TRAXLER, Chief Judge, and KEENAN and THACKER, Circuit
Judges.
Affirmed by published opinion. Judge Thacker wrote the opinion,
in which Chief Judge Traxler and Judge Keenan joined.
ARGUED: Kevin D. Holden, JACKSON LEWIS PC, Richmond, Virginia,
for Appellants.
James B. Thorsen, MARCHANT, THORSEN, HONEY,
BALDWIN & MEYER, LLP, Richmond, Virginia, for Appellee. Mary J.
Rieser, UNITED STATES DEPARTMENT OF LABOR, Washington, D.C., for
Amicus Curiae. ON BRIEF: M. Patricia Smith, Solicitor of Labor,
UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C.; Jennifer
S. Brand, Associate Solicitor, William C. Lesser, Deputy
Associate
Solicitor,
Megan
E.
Guenther,
Counsel
for
Whistleblower Programs, Office of the Solicitor, UNITED STATES
DEPARTMENT OF LABOR, Washington, D.C., for Amicus Curiae.
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THACKER, Circuit Judge:
The Sarbanes-Oxley Act of 2002 makes it illegal for
publicly
traded
companies
to
retaliate
report potentially unlawful conduct.
In
this
case,
Interactive
a
Corp.
video
game
against
who
See 18 U.S.C. § 1514A(a).
publishing
(“SouthPeak”), 1
employees
fired
company,
its
chief
SouthPeak
financial
officer after she raised concerns about a misstatement on one of
the
company’s
filings
Commission (“SEC”).
its
top
officers
with
the
Securities
and
Exchange
A jury found that the company and two of
violated
the
Sarbanes-Oxley
Act,
and
the
district court awarded the chief financial officer more than
half
a
million
dollars
in
back
pay
and
emotional
distress
damages.
The ensuing appeal raises a number of questions about
employees’
rights
under
the
Sarbanes-Oxley
Act.
The
case
requires us to consider such issues as when a whistleblower may
file suit, what she needs to do to exhaust her administrative
remedies, and what types of remedies are available under the
statute.
We affirm the district court’s rulings on each of
these issues.
In doing so, we hold that Sarbanes-Oxley Act
1
In May 2008, a publicly traded acquisition company named
Global Services Partners Acquisition Corp. (“GSPAC”) acquired
all of the outstanding membership interests of SouthPeak. GSPAC
adopted SouthPeak’s name as its own.
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retaliatory
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discharge
claims
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are
subject
to
the
four-year
statute of limitations under 28 U.S.C. § 1658(a), and not the
two-year
further
limitations
hold
satisfies
the
that
period
the
set
forth
administrative
exhaustion
in
§ 1658(b)(1).
complaint
requirement,
and
in
this
that
We
case
emotional
distress damages are available under the statute.
The case also requires us to address the handling of
apparent inconsistencies in a jury verdict and the steps a court
must take in calculating attorneys’ fees.
On these issues, too,
we affirm the district court.
I.
SouthPeak
develops,
and
is
a
Virginia-based
distributes
video
Wii, and other gaming systems.
games
company
for
that
designs,
PlayStation,
Xbox,
In June 2007, the company hired
Andrea Gail Jones (“Appellee”) to work as an accountant.
It
later promoted Appellee to chief financial officer.
A.
In February 2009, SouthPeak sought to place an order
with Nintendo for 50,400 units of a video game called My Baby
Girl.
SouthPeak’s
chief
executive
officer,
Melanie
Mroz
(“Mroz”), and its chairman, Terry Phillips (“Phillips”), hoped
to place the order “as soon as possible,” but the company lacked
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the funds it would need to pay Nintendo in advance.
J.A. 332. 2
To avoid delay, Phillips directed his assistant to send Nintendo
a wire transfer of $307,400 from Phillips’s personal account.
However, the company did not properly record this debt on its
balance sheet or in its quarterly financial report, which was
filed with the SEC on May 15, 2009.
When informed of the omission, Appellee became “very
concerned.”
J.A. 1178.
She asked Phillips for an explanation.
His response, she said, “did not seem, I guess, to make sense or
seem
credible
to
me.”
Id.
at
1226.
About
a
week
later,
Appellee called the chairman of SouthPeak’s audit committee to
report her suspicion that the company was engaging in a fraud.
On August 3, 2009, SouthPeak’s outside counsel asked
Appellee to review and approve draft language for an amendment
to
the
company’s
erroneous
quarterly
report.
The
proposed
amendment denied any intentional fraud or misstatement in the
earlier filing.
In
an
August
Appellee refused to sign the amended report.
13,
2009
letter
to
the
outside
counsel,
she
explained, “I do not know how a conclusion of no intentional
2
This case involves two sets of appeals, each with its own
case number and joint appendix. Though we consolidated the two
appeals (previously labeled 13-2399 and 14-1765) in September
2014, the joint appendices have not been merged. Here, we quote
only from the joint appendix associated with Case No. 13-2399.
All citations to the “J.A.” refer to this joint appendix.
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wrongdoing or fraud can be reached.”
J.A. 1274.
That same day,
SouthPeak’s six-member board of directors held a special meeting
in
which
it
voted
to
terminate
Appellee’s
employment.
Mroz
notified Appellee of the board’s decision the next day.
B.
Appellee, through counsel, filed a complaint with the
Occupational
Safety
October 5, 2009.
and
Health
Administration
(“OSHA”)
on
The complaint states, “On August 14, 2009, in
a clear violation of the [Securities Exchange] Act, SouthPeak
terminated Jones’ employment, apparently in retaliation for Ms.
Jones [sic] attempts to correct statements in periodic reports
filed, and proposed to be filed, by SouthPeak . . . .”
643.
J.A.
In the second numbered paragraph, the complaint further
provides:
The names and addresses of the company(s)
and person(s) who are alleged to have
violated the Act (who the complaint is being
filed against):
SouthPeak Interactive Corporation
2900 Polo Parkway.
Midlothian, VA 23113
804-378-5100
Terry Phillips, Chairman of the Board
Patrice Strachan, [VP] of Operations
Melanie Mroz, Chief Executive Officer
Id. at 645.
On
October
16,
2009,
OSHA
sent
SouthPeak
a
letter
notifying the company of Appellee’s complaint, along with a copy
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of the complaint itself.
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The letter was addressed exclusively
to SouthPeak, without any reference to Mroz or Phillips.
More than 180 days passed without a final order from
OSHA;
consequently,
letter
explaining
lawsuit
pursuant
§ 1980.114(b).
on
July
that
to
See
she
the
18
23,
was
2010,
Appellee
electing
Sarbanes-Oxley
U.S.C.
sent
OSHA
a
to
file
a
federal
Act
and
29
C.F.R.
§ 1514A(b)(1)(B)
(authorizing
suits at law or equity in federal court if the Secretary of
Labor “has not issued a final decision within 180 days of the
filing of [an OSHA] complaint”).
Appellee sent a copy of the
letter
as
to
a
lawyer
Interactive Corp.”
identified
“Counsel
for
SouthPeak
She did not send a copy to Mroz or Phillips.
C.
Appellee waited nearly two years to file suit.
June
18,
2012
complaint
named
SouthPeak,
(collectively, “Appellants”) as defendants.
Mroz,
and
Her
Phillips
The claims included
one count of retaliation pursuant to the Sarbanes-Oxley Act, 18
U.S.C. § 1514A, and one count of retaliation pursuant to the
Dodd-Frank
Wall
Street
Reform
and
Consumer
(“Dodd-Frank”), 15 U.S.C. § 78u-6(h)(1)(A). 3
Protection
Act
The district court
granted Appellants’ motion to dismiss the Dodd-Frank claims on
3
The complaint also included a breach-of-contract claim,
but Appellee withdrew this claim prior to trial.
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retroactivity grounds.
motion
to
dismiss
Appellants’
those
claims
The court, however, denied Appellants’
the
arguments
and
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Sarbanes-Oxley
that
that
the
Act
statute
Appellee
of
claims,
rejecting
limitations
failed
to
barred
exhaust
her
administrative remedies.
A
jury
trial
began
on
July
15,
2013.
At
the
conclusion of the trial, the jury was provided a verdict form
naming each of the three defendants.
defendant separately.
The form addressed each
If the jury found a defendant liable, it
could place a check mark next to a statement to that effect.
The
form
also
compensatory
provided
damages
the
blank
jury
spaces
wished
for
to
any
back
assess
pay
against
or
that
defendant.
The
jury
returned
a
verdict
(the
“First
finding each of the three defendants was liable.
Verdict”)
With regard to
SouthPeak, the jury assessed $593,000 in back pay and $357,000
in compensatory damages.
However, the jury did not assess any
damages against Mroz or Phillips.
In a sidebar conference with
counsel, the court expressed some confusion over whether the
jury might be “trying to account for no duplication of damages.
And I think I need to ask them if that’s what they’re doing or
if they think that there were no damages caused.”
Turning to the jury, the court advised:
8
J.A. 1935.
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Ladies and gentlemen, I notice that in
one place you articulate a sum to be
assessed as damages for compensatory and
backpay.
In two other places, you find the
respective defendants liable but express no
damage figure at all.
It is unclear to us
whether you are finding that that particular
defendant caused no damage or you are simply
trying to avoid awarding more than you
awarded, more damage than you found that Ms.
Jones had suffered. . . .
. . .
So I’m going to let you go back and
take your verdict form, and if you mean it,
with those instructions, you can return it,
or you can amend it, or you can do such
else, or send a question, or do whatever you
need to do.
Id. at 1936-37.
Before the jury could return to the jury room, the
court
agreed
to
a
second
sidebar
conference
with
counsel.
During this discussion, Appellants’ attorney told the court, “I
just
want
to
make
sure
the
jury
doesn’t
take
it
from
your
instruction that they can go back and change it to have damage
against
each
of
them. . . .
I
thought
that
maybe
you
suggesting that that’s what they were supposed to do.”
1937.
were
J.A.
To address this concern, the court clarified its previous
instruction, telling the jurors:
I am not by giving you this instruction
trying to do anything but clear up what
appears to be a problem.
I am not telling
you what you have to do, nor suggesting that
you need to put a damage figure in either of
those places where you have a zero, but we
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need to make sure we have a verdict that we
know what you are doing.
Id. at 1938.
Following a brief discussion in the jury room, the
jury passed the court a note stating: “From SouthPeak we want a
total of 593,000 back pay [and] 357,000 compensatory.
find
that
Terry
Phillips
or
responsible for any amount.”
(internal
quotation
marks
Melanie
Mroz
are
We do not
individually
J.A. 2052 (alteration in original)
omitted).
Conferring
again
with
counsel, the court said, “[I]t seems to me if that’s what they
want to do, they need to make another finding on their verdict
form. . . .
liable.”
[T]hey need to check the one that says you’re not
Id. at 1939.
The attorneys for both sides said they
agreed.
When the jury returned, the foreperson confirmed that
Mroz and Phillips were not individually responsible.
“Then what
you need to do,” the court said, “is eliminate the checkmarks
[indicating
liability
for
Mroz
and
Phillips]
there, and then we will have the verdict.”
and
initial
J.A. 1941.
it
The
court asked the foreperson, “Do you need to retire or can you do
it here?”
Id.
The foreperson said she did not need to retire,
“but evidently someone else does.”
Id.
With that, the court
permitted the jury to return once more to the jury room.
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When, at last, the court session resumed, the jury
returned another verdict (the “Final Verdict”) in which it again
found all three defendants liable.
against
SouthPeak
comprised
compensatory damages.
This time, the assessment
$593,000
in
back
pay
and
no
The assessments against Mroz and Phillips
were for $178,500 apiece in compensatory damages.
In a sidebar
conference, Appellants’ attorney asked the court to “instruct
that they go back and reconsider because it is impossible to
come up with that verdict. . . .
Clearly, there is something
wrong with the way they understand this case because it doesn’t
stand to reason, and the evidence wouldn’t support a verdict of
that nature.”
J.A. 1947-48.
mistrial.
The
court
conference
ended,
the
denied
clerk
The attorney then requested a
the
request.
polled
the
When
jury;
the
every
sidebar
member
affirmed the Final Verdict.
D.
Appellants moved for a new trial, remittitur, or an
amended judgment pursuant to Rules 59 and 60 of the Federal
Rules of Civil Procedure.
They argued, among other things, that
the back pay award was not supported by the evidence, and that
the compensatory damages assessed against Mroz and Phillips were
excessive.
Appellants also argued that the court should have
accepted the First Verdict.
On October 29, 2013, the district
court denied most of Appellants’ requests.
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The court, however,
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the
assessment
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against
SouthPeak,
holding
the
company responsible for $470,000 in back pay and $123,000 in
compensatory damages.
The court also granted SouthPeak’s motion
for a new trial nisi remittitur with regard to the compensatory
damages awards against Mroz and Phillips, giving Appellee an
opportunity to accept a reduced award of $50,000 apiece from
those two defendants.
Appellee accepted the reduced award.
On December 20, 2013, Appellee petitioned the court
for an order holding Appellants jointly and severally liable for
$406,851
in
attorneys’
fees.
Ultimately,
$354,127.05 in attorneys’ fees.
the
court
awarded
As requested, the court held
Appellants jointly and severally liable for the sum.
II.
A.
Statute of Limitations
We
first
consider
Appellants’
statute of limitations bars this action.
which we review de novo.
contention
that
the
This is a legal issue,
See Sewell Coal Co. v. Dir., Office of
Workers’ Comp. Programs, 523 F.3d 257, 259 (4th Cir. 2008).
Appellee filed suit on June 18, 2012, a little less
than three years after her termination.
The district court held
that the Sarbanes-Oxley Act claims were timely because the suit
commenced within the four-year time limit set forth in 28 U.S.C.
§ 1658(a).
However, Appellants argue that § 1658(a) does not
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apply to these claims.
subject
to
the
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Rather, they say, Appellee’s action is
two-year
limitations
period
set
forth
in
§ 1658(b) because the retaliatory discharge claims “involve[] a
claim
of
fraud . . . in
requirement
concerning
the
contravention
of
securities
a
laws.”
regulatory
28
U.S.C.
§ 1658(b).
Section 1658(a) supplies a “catchall,” or “fallback,”
statute
of
“create[]
a
limitations
cause
of
for
certain
action
but
applicable limitations period.”
federal
[are]
statutes
silent
as
to
that
the
H.R. Rep. No. 101-734, at 24
(1990); see Jones v. R. R. Donnelley & Sons Co., 541 U.S. 369,
371 (2004).
The default provision states:
Except as otherwise provided by law, a civil
action arising under an Act of Congress
enacted after the date of the enactment of
this section may not be commenced later than
4 years after the cause of action accrues.
28 U.S.C. § 1658(a).
This provision was on the books for more
than a decade before Congress amended Section 1658 as part of
the
Sarbanes-Oxley
Act.
With
this
legislation,
Congress
retained the default provision but added a new subsection, (b),
which provides:
Notwithstanding subsection (a), a private
right of action that involves a claim of
fraud, deceit, manipulation, or contrivance
in contravention of a regulatory requirement
concerning the securities laws, as defined
in
section
3(a)(47)
of
the
Securities
Exchange Act of 1934 (15 U.S.C. 78c(a)(47)),
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may be brought not later than the earlier
of-(1) 2 years after the discovery of the
facts constituting the violation; or
(2) 5 years after such violation.
Id. § 1658(b).
Courts
securities
have
fraud
not
claims
hesitated
brought
to
under
apply
section
Securities Exchange Act, 15 U.S.C. § 78j(b).
Mobil
Corp.
Sec.
Litig.,
500
F.3d
189,
§ 1658(b)
10(b)
of
to
the
See In re Exxon
196
(3d
Cir.
2007)
(“Indeed, the implied cause of action recognized under § 10(b)
is
widely
known
and
referred
to
as
‘securities
fraud.’
To
conclude that § 1658(b) does not apply to § 10(b) claims would
be absurd.” (citation omitted)).
so.
Congress confined § 1658(b)’s reach to causes of action
involving
a
contrivance
U.S.C.
It is easy to see why this is
claim
in
of
“fraud,
contravention
§ 1658(b).
This
of”
deceit,
manipulation,
or
securities
regulations.
28
language,
as
several
courts
have
previously noted, closely tracks the language of section 10(b)
of the Securities Exchange Act, “which creates liability for
‘any person’ who ‘employ[s] . . . any manipulative or deceptive
device or contrivance in contravention of’ SEC regulations.”
In
re Global Crossing, Ltd. Sec. Litig., 313 F. Supp. 2d 189, 197
(S.D.N.Y.
2003)
(alterations
in
original)
(quoting
§ 78j(b)); see In re Exxon Mobil, 500 F.3d at 196.
14
15
U.S.C.
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Typically,
a
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section 10(b)
securities
fraud
action
requires a plaintiff to “prove six elements: ‘(1) a material
misrepresentation or omission by the defendant; (2) scienter;
(3) a connection between the misrepresentation or omission and
the
purchase
or
sale
of
a
security;
(4)
reliance
upon
the
misrepresentation or omission; (5) economic loss; and (6) loss
causation.’”
Yates v. Mun. Mortg. & Equity, LLC, 744 F.3d 874,
884 (4th Cir. 2014) (quoting Stoneridge Inv. Partners, LLC v.
Scientific-Atlanta, Inc., 552 U.S. 148, 157 (2008)).
The second
element, scienter, separates securities fraud from other causes
of action under the Securities Exchange Act.
It requires the
plaintiff to prove not only that the defendant made a material
misrepresentation,
but
that
he
deceive, manipulate, or defraud.”
did
so
with
the
“intent
to
Tellabs, Inc. v. Makor Issues
& Rights, Ltd., 551 U.S. 308, 319 (2007) (internal quotation
marks omitted).
The text of § 1658(b), with its references to “fraud,”
“deceit,” “manipulation,” and “contrivance,” strongly implies a
need for proof of fraudulent intent. 4
4
The Third Circuit has held
Section 1658(b)(1) speaks in terms of “discovery.” See 28
U.S.C. § 1658(b) (barring suits brought later than “2 years
after the discovery of the facts constituting the violation”).
In this context, the Supreme Court has said, the word
“discovery” is a term of art. See Merck & Co. v. Reynolds, 130
S. Ct. 1784, 1793 (2010). It alludes to the “‘discovery rule,’
a doctrine that delays accrual of a cause of action until the
(Continued)
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accordingly, concluding that § 1658(b) applies only to section
10(b) securities fraud claims “and other claims requiring proof
of fraudulent intent.”
In re Exxon Mobil, 500 F.3d at 197.
In
In re Exxon Mobil Corp. Securities Litigation, the Third Circuit
determined that § 1658(b) did not apply to claims for false or
misleading proxy statements pursuant to section 14(a) of the
Securities Exchange Act because such claims do not require proof
of fraudulent intent.
Id.
Here, in their opening brief, Appellants argue that
§ 1658(b)
covers
Appellee’s
Sarbanes-Oxley
Act
those claims involve “allegations of fraud.”
13.
However,
“allegations.”
§ 1658(b)
does
not
because
Appellants’ Br.
in
terms
of
Per its text, § 1658(b) covers private rights of
action that “involve[] a claim of fraud.”
(emphasis
speak
claims
supplied).
Appellee
has
not
28 U.S.C. § 1658(b)
advanced
a
claim
of
plaintiff has ‘discovered’ it.”
Id.
In fraud cases, it is a
well-settled principle that the limitations period does not
begin until the plaintiff discovers the facts constituting the
fraud or, with due diligence, should have discovered such facts.
See id. at 1794. Critically, though, the Supreme Court has held
that discovery of an alleged misrepresentation is not alone
sufficient to start the two-year limitations period for a
securities fraud claim.
In Merck & Co. v. Reynolds, the Court
held that the § 1658(b)(1) limitations period could not commence
without discovery of scienter, since “[a] plaintiff cannot
recover [for securities fraud] without proving that a defendant
made a material misstatement with an intent to deceive -- not
merely innocently or negligently.”
Id. at 1796 (emphasis
omitted).
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fraud.
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Her claim, rather, alleges retaliatory discharge under
the Sarbanes-Oxley Act.
To succeed on this claim, she must show
that (1) she engaged in protected activity, (2) the employer
knew
that
she
engaged
in
the
protected
activity,
(3)
she
suffered an unfavorable personnel action, and (4) the protected
activity was a contributing factor in the unfavorable action.
See Feldman v. Law Enforcement Assocs. Corp., 752 F.3d 339, 344
(4th Cir. 2014).
proof
that
The first of these elements does not require
the
employer’s
actionable fraud.
“had
both
a
conduct
was,
in
fact,
F.3d
subjective
269,
omitted).
275
legally
The whistleblower need only show that she
belief
and
an
objectively
belief that the conduct” violated relevant law.
536
a
(4th
Cir.
2008)
(internal
reasonable
Welch v. Chao,
quotation
marks
Though courts have stated that the whistleblower’s
theory of fraud should “at least approximate the basic elements”
of fraud, Day v. Staples, Inc., 555 F.3d 42, 55 (1st Cir. 2009);
accord Van Asdale v. Int’l Game Tech., 577 F.3d 989, 1001 (9th
Cir.
2009),
it
is
not
necessary
to
show
that
a
shareholder
would, in fact, have accrued a cause of action.
Appellee’s complaint was not specific in identifying
the securities law that she believed Appellants violated.
Her
allegation does, however, approximate the basic elements of a
section
bringing
10(b)
a
securities
section
10(b)
fraud
claim
17
claim.
would
While
bear
a
the
shareholder
burden
of
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establishing
Filed: 01/26/2015
a
strong
inference
Pg: 18 of 42
of
scienter,
see
15
U.S.C.
§ 78u-4(b)(2)(A), Appellee is under no such obligation.
Her
retaliation claim can succeed without “discovery of the facts
constituting” securities fraud.
28 U.S.C. § 1658(b)(1).
It
stands to reason, then, that § 1658(b)(1), which hinges on the
discovery
of
controls,
and
such
facts,
because
does
Appellee
not
apply.
brought
her
Section
suit
1658(a)
within
that
section’s four-year window, her claim is not barred.
B.
Exhaustion of Administrative Remedies
The
next
question
before
us
is
whether
Appellee
properly exhausted her administrative remedies as to Mroz and
Phillips.
novo.
This is a pure question of law, which we review de
See E.L. ex rel. Lorsson v. Chapel Hill-Carrboro Bd. of
Educ., No. 13-2330, 2014 WL 6783052 (4th Cir. Dec. 3, 2014).
By statute, a Sarbanes-Oxley Act whistleblower cannot
go
straight
to
court.
Rather,
she
must
first
administrative complaint with the Secretary of Labor.
U.S.C. § 1514A(b)(1).
file
See 18
This complaint must be filed “not later
than 90 days after the date on which such violation occurs.”
U.S.C. § 42121(b)(1).
an
49
The whistleblower must then wait 180 days
for OSHA to investigate the allegation and issue a decision.
See 18 U.S.C. § 1514A(b)(1)(B).
If, after 180 days, OSHA has
not issued a final decision “and there is no showing that such
18
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delay
is
Filed: 01/26/2015
due
whistleblower
to
the
may
bad
bring
Pg: 19 of 42
faith
of
the
“for
de
novo
suit
claimant,”
the
review
the
appropriate district court of the United States.”
Appellants
complaint
was
recognize
timely,
and
that
decision within 180 days.
complaint
did
not
respondents.
with
OSHA
that
Id.
Appellee’s
OSHA
did
not
in
administrative
issue
a
final
They argue, though, that the OSHA
clearly
identify
Mroz
and
Phillips
as
They further assert that even if the fault lies
for
failing
to
pursue
claims
against
Mroz
and
Phillips, the burden was on Appellee to press OSHA to address
its oversight.
To
meaningless
be
if
sure,
the
an
exhaustion
complainant
were
requirement
free
to
would
litigate
be
claims
bearing little or no connection to the preceding administrative
complaint.
In the context of Title VII cases, we have long
recognized that “[t]he scope of the plaintiff’s right to file a
federal lawsuit is determined by” the contents of the charge
filed with the Equal Employment Opportunity Commission (“EEOC”).
Jones v. Calvert Grp., Ltd., 551 F.3d 297, 300 (4th Cir. 2009);
see Chacko v. Patuxent Inst., 429 F.3d 505, 506 (4th Cir. 2005)
(holding
that
administrative
reference
conduct
a
Title
remedies
different
than
the
VII
plaintiff
where . . . his
time
central
“fails
exhaust
administrative
frames,
actors,
factual
allegations
19
to
and
his
charges
discriminatory
in
his
formal
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suit”).
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However,
we
have
Pg: 20 of 42
also
said
that
the
administrative
charge “does not strictly limit” the ensuing lawsuit.
Bryant v.
Bell Atl. Md., Inc., 288 F.3d 124, 132 (4th Cir. 2002) (internal
quotation marks omitted).
Rather, the litigation may encompass
claims “reasonably related to the original complaint, and those
developed
by
complaint.”
reasonable
investigation
of
the
original
Evans v. Techs. Applications & Serv. Co., 80 F.3d
954, 963 (4th Cir. 1996); see Sydnor v. Fairfax Cnty., Va., 681
F.3d 591, 595 (4th Cir. 2012) (“The touchstone for exhaustion is
whether
plaintiff’s
reasonably
related,
administrative
not
precisely
and
the
judicial
claims
same . . . .”
are
(citation
and internal quotation marks omitted)).
Our decision in Sydnor v. Fairfax County, Virginia,
681
F.3d
disabled
591
nurse
(4th
Cir.
indicated
2012),
in
a
is
illustrative.
questionnaire
There,
accompanying
a
her
EEOC charge that she had sought authorization to perform lightduty work.
Americans
Later, in a lawsuit alleging a violation of the
with
Disabilities
Act,
she
sought
a
different
accommodation -- namely, authorization for full-duty work with
the assistance of a wheelchair.
See 681 F.3d at 594.
We found
this distinction to be insignificant, reasoning that the EEOC
questionnaire afforded the nurse’s employer “ample notice of the
allegations
against
it.”
Id.
at
595.
We
stated,
“The
exhaustion requirement should not become a tripwire for hapless
20
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plaintiffs.
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While it is important to stop clever parties from
circumventing
statutory
commands,
we
may
not
erect
insurmountable barriers to litigation out of overly technical
concerns.”
Id. at 594.
Nothing in the record before us suggests that Appellee
was
trying
to
requirement.
circumvent
See
the
Woodford
v.
Sarbanes-Oxley
Act
exhaustion
Ngo,
81,
90
548
U.S.
(2006)
(“[E]xhaustion requirements are designed to deal with parties
who do not want to exhaust . . . .”).
Appellee’s OSHA complaint
is substantially similar to her complaint in this action.
alleged
harm,
addition,
a
the
retaliatory
OSHA
termination,
complaint
plainly
is
identical.
identifies
Mroz
The
In
and
Phillips as “person(s) who are alleged to have violated the Act
(who the complaint is being filed against).”
more
precise
is
required.
Indeed,
the
J.A. 645.
Department
Nothing
of
Labor
regulations in effect at the time Appellee filed the complaint
expressly provided that “[n]o particular form of complaint is
required.”
29 C.F.R. § 1980.103(b) (2009).
Appellee satisfied
her burden, and OSHA’s subsequent treatment of the complaint
cannot take away her opportunity to seek recourse.
Cf. B.K.B.
v. Maui Police Dep’t, 276 F.3d 1091, 1099 (9th Cir. 2002) (“The
EEOC’s failure to address a claim asserted by the plaintiff in
her charge has no bearing on whether the plaintiff has exhausted
her administrative remedies with regard to that claim.”).
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We recognize that a primary objective of exhaustion
requirements
is
against them.
to
put
parties
on
notice
of
the
allegations
In the context of Title VII actions, exhaustion
gives the employer an opportunity to investigate and resolve the
issue
and
“prevents
the
employer
from
later
complaining
of
prejudice, since it has known of the allegations from the very
beginning.”
Chacko, 429 F.3d at 510.
Here, though, there can
be no doubt that Mroz and Phillips were well aware of Appellee’s
allegations.
Mroz
was
the
company’s
chief
executive,
and
Phillips its chairman.
In its October 2009 letter notifying
SouthPeak
administrative
of
Appellee’s
complaint,
Phillips as the contact person for the company.
OSHA
listed
Subsequently,
SouthPeak’s counsel discussed the complaint with both Mroz and
Phillips.
Surely, it could not have gone unnoticed that the
complaint identified Mroz and Phillips as “person(s) who are
alleged to have violated the Act.”
J.A. 645.
It should not
have been all that surprising, then, when Appellee named the two
executives in the instant civil action.
C.
Nature of Available Remedies
Appellants
distress
damages.
next
The
challenge
Final
Verdict
the
award
held
Mroz
of
and
emotional
Phillips
accountable for $178,500 apiece in compensatory damages.
The
district court, which later reduced that sum to $50,000 apiece,
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inferred that these awards must represent Appellee’s damages for
emotional distress.
Appellants argue that such damages are not
permissible under the whistleblower protection provisions of the
Sarbanes-Oxley
Act.
We
reject
this
reading
of
18
U.S.C.
§ 1514A(c), which expressly entitles a prevailing employee to
“all
relief
necessary
§ 1514A(c)(1).
to
make
[her]
whole.”
18
U.S.C.
We also reject Appellants’ backup argument that
the emotional distress award in this case was excessive.
1.
Availability of Emotional Distress Damages
The
first
question
is
whether
emotional
damages are available under 18 U.S.C. § 1514A(c).
a question of law that we review de novo.
distress
This, too, is
See Rice v. Cmty.
Health Ass’n, 203 F.3d 283, 287 (4th Cir. 2000) (applying de
novo
review
to
a
district
court’s
determination
that
West
Virginia contract law permitted consequential damages).
The remedies provision at § 1514A(c) has two parts.
Subsection
(c)(1)
provides:
“An
employee
prevailing
in
any
[enforcement] action under [18 U.S.C. § 1514A(b)(1)] shall be
entitled to all relief necessary to make the employee whole.”
18 U.S.C. § 1514A(c)(1).
In subsection (c)(2), the provision
goes on to state that compensatory damages
shall include --
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(A) reinstatement with the same seniority
status that the employee would have had, but
for the discrimination;
(B) the amount of back pay, with interest;
and
(C) compensation for any special damages
sustained as a result of the discrimination,
including litigation costs, expert witness
fees, and reasonable attorney fees.
Id. § 1514A(c)(2).
Appellants argue that the three forms of compensatory
damages
itemized
in
subsection
(c)(2)
relief available under the statute.
this
argument.
subsection
First,
(c)(1)
it
all
that
says
a
are
the
only
forms
of
There are two problems with
but
ignores
prevailing
the
language
employee
“shall
in
be
entitled to all relief necessary to make the employee whole.”
18 U.S.C. § 1514A(c)(1).
Second, Appellants’ interpretation of
the words “shall include” in subsection (c)(2) is at odds with
our
precedent.
In
Project
Vote/Voting
for
America,
Inc.
v.
Long, we said that “the term ‘shall include’ sets a floor, not a
ceiling.”
marks
682 F.3d 331, 337 (4th Cir. 2012) (internal quotation
omitted)
(interpreting
Voter Registration Act).
section
8(i)(2)
of
the
National
“Courts have repeatedly indicated that
‘shall include’ is not equivalent to ‘limited to.’”
Id.
To date, two federal circuit courts have considered
the availability of emotional distress damages under § 1514A.
Both
have
concluded
that
such
24
damages
are
available.
See
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Halliburton, Inc. v. Admin. Review Bd., 771 F.3d 254, 266 (5th
Cir. 2014); Lockheed Martin Corp. v. Admin. Review Bd., 717 F.3d
1121,
1138
Appellants
district
(10th
can
court
Cir.
only
2013).
direct
decisions,
To
our
support
attention
most
of
them
to
its
a
position,
smattering
unpublished.
of
These
cases, by and large, liken § 1514A(c) to the remedies provision
in Title VII prior to its 1991 amendments.
See, e.g., Walton v.
NOVA Info. Sys., 514 F. Supp. 2d 1031, 1035 (E.D. Tenn. 2007);
Murray v. TXU Corp., No. Civ.A.3:03-CV-0888-P, 2005 WL 1356444,
at
*3
(N.D.
Tex.
June
7,
2005).
At
that
time,
Title
VII
provided:
[T]he court may enjoin the respondent from
engaging
in
such
unlawful
employment
practice, and order such affirmative action
as may be appropriate, which may include,
but is not limited to, reinstatement or
hiring of employees, with or without back
pay . . ., or any other equitable relief as
the court deems appropriate.
42 U.S.C. § 2000e-5(g) (1988).
In United States v. Burke, the
Supreme Court held that this provision did not support damages
for “pain and suffering, emotional distress, harm to reputation,
or other consequential damages.”
504 U.S. 229, 239 (1992).
The
district court opinions cited by Appellants suggest that the
Sarbanes-Oxley Act remedies provision at 18 U.S.C. § 1514A(c)
operates the same way.
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The Fifth Circuit’s decision in Halliburton, Inc. v.
Administrative
Review
Board,
771
F.3d
254
(5th
Cir.
2014),
explains why the district courts’ reasoning misses the mark.
its
terms,
prevailing
the
Sarbanes-Oxley
plaintiff
employee whole.”
to
“all
Act
provision
relief
necessary
18 U.S.C. § 1514A(c)(1).
VII was not so generous.
entitles
to
make
By
a
the
Pre-amendment Title
See Halliburton, 771 F.3d at 265.
Beyond that, the Sarbanes-Oxley Act “plainly affords at least
some damages, that is, legal relief, in addition to equitable
remedies.”
Id.;
see
18
U.S.C.
§ 1514A(b)(1)(B)
(authorizing
Sarbanes-Oxley Act whistleblowers to bring “an action at law or
equity”).
relief.”
Pre-amendment
Title
VII
“afforded
only
equitable
Halliburton, 771 F.3d at 265.
In the Fifth Circuit’s view, and in ours, the remedies
provision
in
18
U.S.C.
§ 1514A
more
strongly
resembles
the
remedies provision for retaliation claims under the False Claims
Act,
31
U.S.C.
§ 3730(h).
In
language
that
parallels
the
provision now before us, the False Claims Act states that a
prevailing plaintiff “shall be entitled to all relief necessary
to make that [plaintiff] whole.”
31 U.S.C. § 3730(h)(1).
It
further states that relief “shall include” reinstatement, back
pay, and “compensation for any special damages sustained as a
result
of
the
discrimination,
reasonable attorneys’ fees.”
including
litigation
Id. § 3730(h)(2).
26
costs
and
Every federal
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circuit court to have addressed the issue has concluded that the
False
Claims
Act
“affords
noneconomic
compensatory
damages.”
Halliburton, 771 F.3d at 265; see Brandon v. Anesthesia & Pain
Mgmt. Assocs., Ltd., 277 F.3d 936, 944 (7th Cir. 2002) (stating
that the allowance for special damages in 31 U.S.C. § 3730(h)
“permits recovery for emotional distress”); Hammond v. Northland
Counseling Ctr., Inc., 218 F.3d 886, 892-93 (8th Cir. 2000).
Though the case before us centers on a termination of
employment, we note that the Sarbanes-Oxley Act whistleblower
protection
actions,
provisions
including
§ 1514A(a).
proscribe
threats
a
and
wide
range
harassment.
of
retaliatory
See
18
U.S.C.
There will be times when the primary harm will be
noneconomic.
In these instances, the Department of Labor (the
“Department”) observes, “non-pecuniary compensatory relief, such
as emotional distress damages, may be the only remedy that would
make the complainant whole.”
Amicus Br. 23.
takes
statute
the
distress
Review
position
awards,
Board
that
and
has
the
indeed
a
the
history
countenances
Department’s
of
The Department
upholding
emotional
Administrative
non-pecuniary
compensatory damages in Sarbanes-Oxley Act whistleblower cases.
See Menendez v. Halliburton, Inc., Case Nos. 09-002, -003, 2013
WL 1282255, at *11 (Admin. Rev. Bd. March 15, 2013).
circumstances,
where
Congress
has
explicitly
In these
empowered
the
Department to enforce § 1514A by formal adjudication, we afford
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deference to the Department’s interpretation.
F.3d at 276 n.2.
See Welch, 536
We therefore join the Department, and the
Fifth and Tenth Circuits, in concluding that emotional distress
damages are available under § 1514A(c).
2.
Amount of Emotional Distress Damages
Appellants argue in the alternative that the emotional
distress award was excessive.
Appellants, we note, have already
benefitted from a reduction in the emotional distress damages.
In its Final Verdict, the jury found Mroz and Phillips liable
for $178,500 apiece, all for emotional distress.
The district
court later reduced these awards to $50,000 apiece.
The “power and duty of the trial judge to set aside”
an excessive verdict is “well-established.”
Stores,
Inc.,
144
F.3d
quotation marks omitted).
of
Civil
Procedure,
a
294,
304
(4th
Cline v. Wal-Mart
Cir.
1998)
(internal
Under Rule 59(a) of the Federal Rules
court
may
order
a
new
trial
nisi
remittitur if it “concludes that a jury award of compensatory
damages is excessive.”
Sloane v. Equifax Info. Servs., LLC, 510
F.3d 495, 502 (4th Cir. 2007).
On appeal, we reverse the grant
or denial of a motion for new trial “only upon a showing of
abuse of discretion.
Pursuant to this standard, ‘[w]e must give
the benefit of every doubt to the judgment of the trial judge,’
while
recognizing
that
‘there
28
must
be
an
upper
limit
[to
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allowable damages].’”
original)
(citation
Pg: 29 of 42
Cline, 144 F.3d at 305 (alterations in
omitted)
(quoting
Gasperini
v.
Ctr.
for
Humanities, Inc., 518 U.S. 415, 435 (1996)).
We find no abuse of discretion here.
the
district
court’s
opinion
offers
a
To the contrary,
meticulous
and
well-
reasoned explanation for the reduced award the court selected.
See Jones v. SouthPeak Interactive Corp. of Del., 982 F. Supp.
2d 664, 677-82 (E.D. Va. 2013).
Appellee’s
family
testimony
and
her
about
psyche.
The court properly took note of
the
toll
Appellee,
her
firing
on
her
herself
describing
took
as
the
“bread winner of the family,” testified that her termination
“caused concern . . . .
We have four children [who at] that
time ranged from age eleven to age four.
So there was a lot of
responsibility, and always has been on my shoulders to provide
for the family.”
J.A. 1278.
Appellee said she felt “awful”
because she had no choice but to seek unemployment benefits.
Id.
at
1279.
On
job
interviews,
she
said,
the
interviewer
“would always get to the question, why you were terminated[.]
And that was not a good conversation.”
Id. at 1287.
All told,
it took 23 months for Appellee to secure a new full-time job.
Appellee
also
testified
that,
even
years
after
her
termination, she still cries sometimes when she thinks about her
experience
at
SouthPeak.
As
the
district
court
noted,
Appellee’s husband corroborated her account, saying he has “been
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woken up many times in the middle of the night with her crying.
Not understanding, like, people do the things they do, and lie
about her.
And just not knowing why bad things happen.”
Jones,
982 F. Supp. 2d at 680.
After concluding that the evidence supported an award
for emotional distress, the court compared the jury’s damages
assessment to awards in comparable cases, just as we have done
in our own review of awards for emotional distress.
See, e.g.,
Hetzel v. Cnty. of Prince William, 89 F.3d 169, 172-73 (4th Cir.
1996) (comparing cases involving awards for emotional distress).
This was a sound approach.
We see no reason to disturb the
court’s judgment.
D.
Perceived Inconsistencies in the Verdict
We turn now to the hubbub that followed the jurors’
emergence from the jury room.
Appellants raise two arguments
about this stage of the proceedings.
In the first place, they
argue that the court should have accepted the First Verdict.
Separately,
Appellants
argue
accepted the Final Verdict.
that
the
court
should
not
have
We address each of these arguments
in turn.
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1.
The First Verdict
First, we consider the district court’s decision to
reject the First Verdict as inconsistent.
As this presents a
mixed question of law and fact, see Wilks v. Reyes, 5 F.3d 412,
415 (9th Cir. 1993), we inspect the court’s factual findings for
clear error and examine de novo the legal conclusions derived
from those facts, see Meson v. GATX Tech. Servs. Corp., 507 F.3d
803, 806 (4th Cir. 2007).
Actions taken after the inconsistency
determination are reviewed for abuse of discretion.
See Hauser
v. Kubalak, 929 F.2d 1305, 1308 (8th Cir. 1991) (per curiam).
Rule 49(b)(3) of the Federal Rules of Civil Procedure
outlines
several
options
available
to
a
district
court
when
answers to written questions are inconsistent with a general
verdict. 5
These options are: “(A) approve, for entry under Rule
5
Rule 49(b) covers general verdicts, which are those “by
which the jury finds in favor of one party or the other, as
opposed to resolving specific fact questions.”
Black’s Law
Dictionary 1696 (9th ed. 2009).
The rule does not apply to
special verdicts -- i.e., verdicts “in which the jury makes
findings only on factual issues submitted to them by the judge,
who then decides the legal effect of the verdict.” Id. at 1697.
Although the verdict form here has characteristics of both a
general verdict and a special verdict, in that it seeks a
conclusion on liability but separate damage assessments for each
defendant, it is best characterized as a general verdict.
See
Mason v. Ford Motor Co., 307 F.3d 1271, 1275 (11th Cir. 2002)
(per curiam) (characterizing a similar verdict form as a general
verdict).
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an
Filed: 01/26/2015
appropriate
notwithstanding
the
Pg: 32 of 42
judgment
general
according
verdict;
(B)
to
the
direct
answers,
the
jury
to
further consider its answers and verdict; or (C) order a new
trial.”
Fed. R. Civ. P. 49(b)(3).
The purpose of this rule, we
have stated, “is to promote the efficiency of trials by allowing
the
original
deliberating
body
to
reconcile
inconsistencies
without the need for another presentation of the evidence to a
new body.”
Austin v. Paramount Parks, Inc., 195 F.3d 715, 725
(4th Cir. 1999) (internal quotation marks omitted).
A district judge who “concludes that an inconsistent
verdict
reflects
jury
confusion
or
uncertainty . . . has
the
duty to clarify the law governing the case and resubmit the
verdict for a jury decision.”
575 (4th Cir. 1992).
responses
police
on
the
officers
pursuant
to
42
awarded
punitive
In Hafner v. Brown, the jury’s initial
verdict
were
U.S.C.
Hafner v. Brown, 983 F.2d 570,
form
liable
indicated
for
§ 1983.
damages
that
conspiracy
983
F.2d
against
at
those
in
two
a
574.
that
the
jurors
“clearly
were
civil
suit
The
jury
officers,
perplexingly, it awarded no compensatory damages.
agreed
Baltimore
confused,”
but,
See id.
and
We
held,
accordingly, that the district court did not err in offering a
supplemental jury instruction and allowing the jury to reconvene
for further deliberation.
Id. at 574-75.
32
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Here,
Although
it
the
would
jury
not
Pg: 33 of 42
found
all
necessarily
three
be
Appellants
inconsistent
liable.
to
find
liability but assess no damages, see Zhang v. Am. Gem Seafoods,
Inc., 339 F.3d 1020, 1036 (9th Cir. 2003), it is difficult to
square
what
the
jury
did
in
the
First
Verdict.
With
this
verdict, the jury indicated that Appellee was entitled to back
pay and compensatory damages, but only from SouthPeak.
This is
peculiar, given Mroz and Phillips’s involvement in the unlawful
termination.
did
the
Faced with this discrepancy, the district court
sensible
thing:
it
conferred
with
counsel,
then
administered a supplemental jury instruction and sent the jury
back to redeliberate.
See Hafner, 983 F.2d at 575.
In the
process, the court identified the source of its confusion but
was careful to state that it did not wish to influence the
jury’s decision.
We see no error.
2.
The Final Verdict
We next consider the Final Verdict.
that
it
was
“irreconcilably
SouthPeak . . . caused
back
inconsistent
pay
damages
but
Appellants argue
to
no
find
that
compensatory
damages and that Phillips and/or Mroz caused no back pay damages
but did cause compensatory damages -- since it is the same set
of facts alleged against each defendant that supposedly caused
the
same
harm.”
Appellants’
Br.
33
38.
The
district
court
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Pg: 34 of 42
rejected this argument when Appellants raised it in a Rule 59
motion for a new trial.
We review the denial of Appellants’
motion for abuse of discretion.
See Gregg v. Ham, 678 F.3d 333,
342 (4th Cir. 2012).
“A jury verdict may be set aside and the case remanded
for
a
new
findings.
is
trial
when
it
is
not
possible
to
reconcile
the
Likewise, a new trial is appropriate if the verdict
against
the
clear
weight
of
the
evidence . . . .”
TransDulles Center, Inc. v. USX Corp., 976 F.2d 219, 227 (4th
Cir. 1992).
Here, the Final Verdict did not conflict with the
jury instructions.
verdict
See id. at 227-28 (rejecting a claim of
inconsistency
instructions).
where
the
verdict
accorded
with
jury
In charging the jury, the district court did not
state that the jury must hold the defendants liable for equal
sums.
The court instructed the jury: “[I]f you return a verdict
in favor of Mrs. Jones against any defendant, you should put in
the amount of damages you think are recoverable.”
J.A. 1930.
The jury did just that.
Appellants have not shown that the Final Verdict was
“against the weight of the evidence or based on evidence which
is false.”
omitted).
Gregg, 678 F.3d at 343 (internal quotation marks
While it is true that a single act -- a retaliatory
discharge -- caused Appellee’s injury, we believe a reasonable
jury
could
recognize
the
distinct
34
role
that
each
appellant
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played in that act.
Pg: 35 of 42
After all, it was SouthPeak -- not Mroz or
Phillips -- that paid Appellee’s salary and that stopped paying
it upon her termination.
Though Mroz and Phillips were involved
in the decision to fire Appellee, they could not make it alone;
that decision belonged to the entire board of directors.
That
being the case, it would hardly have been unreasonable for the
jury
to
conclude
that
SouthPeak,
rather
than
executives, should cover the back pay award.
not
unreasonable
responsibility
for
to
conclude
Appellee’s
that
Mroz
emotional
allegedly
lied
company’s SEC filings.
of
Appellee’s
tearfully
to
and
Phillips
distress.
her
about
its
the
Both
bear
were
Beyond that,
errors
in
the
And it was Mroz who delivered the news
termination.
recalled
Appellee
of
Similarly, it is
involved in the decision to terminate Appellee.
Phillips
two
Appellee
experiences
testified
at
that
SouthPeak,
she
has
again
and
again, in the years since her firing, and we do not doubt that
these scenes loom in her recollections.
In short, we do not share Appellants’ view that the
Final Verdict was “inherently inconsistent.”
38.
Appellants’ Br.
The district court was not obliged to reject it, and its
denial
of
Appellants’
Rule
59
discretion.
35
motion
was
not
an
abuse
of
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Pg: 36 of 42
E.
Attorneys’ Fees
Lastly,
Appellants
make
there
two
is
the
matter
First,
arguments.
of
attorneys’
they
assert
fees.
that
the
district court failed to follow the three-step process outlined
in McAfee v. Boczar, 738 F.3d 81 (4th Cir. 2013).
Second, they
challenge the court’s joint-and-several allocation of attorneys’
fees.
We review an award of attorneys’ fees for abuse of
discretion.
235,
243
See Robinson v. Equifax Info. Servs., LLC, 560 F.3d
(4th
Cir.
2009).
In
making
this
assessment,
we
recognize that our review of the record, no matter how careful,
cannot substitute for the district court’s “close and intimate
knowledge of the efforts expended and the value of the services
rendered.”
Id.
(internal
quotation
marks
omitted).
Accordingly, “we will only reverse such an award if the district
court
is
clearly
wrong
or
has
committed
an
error
of
law.”
McAfee, 738 F.3d at 88.
1.
Calculation of Attorneys’ Fees
Our
opinion
in
McAfee
states
that
the
“proper
calculation of an attorney’s fee involves a three-step process.”
738 F.3d at 88.
First, “the court must determine the lodestar
figure by multiplying the number of reasonable hours expended
36
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times
a
Filed: 01/26/2015
reasonable
omitted).
rate.”
Pg: 37 of 42
Id.
(internal
quotation
marks
Second, “the court must subtract fees for hours spent
on unsuccessful claims unrelated to successful ones.
[Third],
the court should award some percentage of the remaining amount,
depending on the degree of success enjoyed by the plaintiff.”
Id.
(citation
omitted)
(internal
quotation
marks
omitted).
Appellants argue the court neglected to perform the third step.
They deem this omission a reversible error and urge us to vacate
the fee award.
To be sure, it can be challenging to put a number on
“success.”
There is no “precise rule or formula” to aid the
court in determining just how successful a plaintiff may have
been.
Hensley v. Eckerhart, 461 U.S. 424, 436 (1983).
To wit,
the Supreme Court has said it would be inappropriate to simply
compare
“the
total
number
actually prevailed upon.”
marks omitted).
of
issues
in
the
case
with
those
Id. at 435 n.11 (internal quotation
Likewise, although we have advised courts to
compare the damages award to the amount sought, a court should
not reduce a fee award “simply because the plaintiff failed to
prevail on every contention raised in the lawsuit.”
Id. at 435.
A court may consider whether a fee award seems reasonable in
light of the amount of damages awarded.
However, “a substantial
disproportionality between a fee award and a verdict, standing
37
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Filed: 01/26/2015
Pg: 38 of 42
alone, may not justify a reduction in attorney’s fees.”
McAfee,
738 F.3d at 94.
Here, the district court did not organize its opinion
as our instructions in McAfee indicate it should have.
However,
it is simply untrue to claim that the court failed to consider
Appellee’s degree of success.
The court’s opinion takes note of
Appellants’ claim that Appellee “was not successful in certain
aspects of the case.”
Jones v. SouthPeak Interactive Corp. of
Del., No. 3:12cv443, 2014 WL 2993443, at *11 (E.D. Va. July 2,
2014).
The court acknowledged that Appellants, “to some extent,
were successful in reducing the damage award.”
Id. at *12.
However, it said, that reduction “is not an unsuccessful claim
as to which a fee request needs to be reduced in the same manner
as not succeeding on the claim at all.”
the
court
said,
of
Appellee’s
Id.
unsuccessful
The same is true,
efforts
to
block
discovery and to prevent the withdrawal of defense counsel.
See
id.
The
“the
amount
excessive
court
of
and
also
hours
in
addressed
attributed
light
of
the
Appellants’
to
argument
post-judgment
limited
success
that
motions
is
[Appellee]
obtained at the post-judgment stage, it is not reasonable and it
should be reduced.”
marks omitted).
2014 WL 2993443, at *14 (internal quotation
In response, the court repeated that Appellee
“had substantial and material success at trial . . . .
38
[I]t is
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not
Doc: 59
true
that
Filed: 01/26/2015
[Appellee]
judgment stage].
total
judgment
had
Pg: 39 of 42
limited
success
[in
the
post-
[Appellee] retained a large portion of the
and
she
successfully
request for a new trial.”
opposed
[Appellants’]
Id.
Plainly, then, the court considered Appellee’s success
in the litigation and concluded that Appellee was substantially
and materially successful.
The facts support this conclusion.
The jury found all three defendants liable for violations of the
Sarbanes-Oxley Act and awarded damages against each defendant.
Following
remittitur,
the
total
award
came
including $44,000 in pre-judgment interest.
out
to
$737,000,
This is about one-
third of the roughly $2 million that Appellee sought. 6
Given
this result, we cannot say that declining to reduce the lodestar
figure was an abuse of discretion.
See Hensley, 461 U.S. at 435
(“Where a plaintiff has obtained excellent results, his attorney
should recover a fully compensatory fee.”).
2.
Allocation of Attorneys’ Fees
Appellants’
several
allocation
final
of
argument
attorneys’
6
is
fees
that
was
the
an
joint-andabuse
of
Appellee’s Rule 26 disclosures list $2,524,337 in damages
sought.
This figure includes $500,000 in punitive damages;
however, Appellee did not request punitive damages in her
complaint.
39
Appeal: 13-2399
Doc: 59
discretion.
Filed: 01/26/2015
Pg: 40 of 42
We disagree, on the ground that the district court
enjoys considerable latitude in deciding how it will allocate
attorneys’ fees.
The proposition that district courts have discretion
over
the
proper
allocation
of
defendants is widely recognized.
a
fee
award
among
multiple
See, e.g., Torres-Rivera v.
O’Neill-Cancel, 524 F.3d 331, 337 (1st Cir. 2008); Herbst v.
Ryan, 90 F.3d 1300, 1304 (7th Cir. 1996); Council for Periodical
Distribs. Ass’ns v. Evans, 827 F.2d 1483, 1487-88 (11th Cir.
1987).
award
Options available to a court may include: dividing the
equally
among
the
defendants;
apportioning
the
award
according to the defendants’ relative culpability; awarding fees
“in the same proportions as [the] jury assessed actual damages”;
or holding a single defendant liable for fees related to a claim
for which that defendant was “solely or largely responsible.”
Council for Periodical Distribs., 827 F.2d at 1487-88.
A court
is free to combine two or more of these methods, or it may
select another method entirely.
See id. at 1488.
Two of our sister circuits -- the Seventh and District
of Columbia Circuits -- have identified several situations in
which it may be appropriate to hold all defendants jointly and
severally liable for attorneys’ fees.
Elections
&
Ethics,
354
Herbst, 90 F.3d at 1305.
F.3d
890,
See Turner v. D.C. Bd. of
897-98
(D.C.
Cir.
2004);
For instance, they have said, “[i]t is
40
Appeal: 13-2399
Doc: 59
frequently
Filed: 01/26/2015
appropriate
to
Pg: 41 of 42
hold
all
defendants
jointly
and
severally liable for attorneys’ fees in cases in which two or
more
defendants
violation.”
897.
actively
participated
in
a
constitutional
Herbst, 90 F.3d at 1305; accord Turner, 354 F.3d at
A defendant’s ability to pay the award may be of some
relevance as well.
In civil rights cases, “courts have upheld
the imposition of joint and several liability for a fee award
where there existed a question as to whether the fee would be
collectible from one of the defendants.”
Herbst, 90 F.3d at
1306 n.13; accord Turner, 354 F.3d at 897-98.
Columbia
Circuit
has
also
said
that
“a
The District of
plaintiff’s
fully
compensatory fee for claims centered on a set of common issues
against two or more jointly responsible defendants should be
assessed
jointly
and
severally.”
Turner,
354
F.3d
at
898
(internal quotation marks omitted).
Here, Appellants call on us to redistribute the fee
award in proportion to each appellant’s share of the damages
awarded.
We have never required a defendant’s share of a fee
award to equal his share of damages, nor have other circuits.
See, e.g., Corder v. Gates, 947 F.2d 374, 383 (9th Cir. 1991)
(“We have never mandated apportionment based on each defendant’s
relative
liability
requirement
would
under
take
a
away
jury’s
the
verdict.”).
discretionary
Such
power
district courts have traditionally enjoyed in this area.
41
a
that
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Even
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if,
in
the
first
Pg: 42 of 42
instance,
we
might
not
have
decided to hold Appellants jointly and severally liable for the
fee award, we cannot say that the district court’s decision was
an
abuse
of
discretion.
executives at SouthPeak.
fire Appellee.
Mroz
and
Phillips
were
high-level
Both were involved in the decision to
The claims against all three Appellants were the
same, and although the damages awards ended up differing, the
work that Appellee’s counsel put into developing, investigating,
and
pursuing
those
claims
cannot
be
so
easily
divided.
Accordingly, we affirm.
III.
For
the
foregoing
reasons,
the
judgment
of
the
district court is
AFFIRMED.
42
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